Power firms to pay millions in redress

'A clear message to the energy industry that late delivery of obligations is unacceptable' - Sarah Harrison. Picture: Contributed

'A clear message to the energy industry that late delivery of obligations is unacceptable' - Sarah Harrison. Picture: Contributed

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SCOTTISH utility giants SSE and ScottishPower are to pay penalties totalling £4.15 million to charity following their failure to deliver energy efficiency measures on time.

The pair were required to implement moves to help reduce bills for households in low-income areas by December 2012 but ScottishPower only delivered 70 per cent of its obligation and Scottish Hydro-owner SSE achieved 90.9 per cent.

Regulator Ofgem said yesterday that it had secured a redress package of £2.4m from ScottishPower and £1.75m from SSE, with the payments going towards charities and funds that will benefit vulnerable consumers.

The penalties mean the regulator has secured £55m from six companies due to their failure to meet the UK government’s community energy savings programme (CESP) and the carbon emissions reduction target (CERT).

Last week, Ofgem ordered British Gas to pay £11m while it issued power station operator Drax with a record penalty of £28m.

Fellow generation firms InterGen and GDF Suez/IPM are to pay £11m and £450,000 respectively.

Ofgem said ScottishPower’s failure to meet its CESP target meant that several thousand households missed out on energy efficiency measures during the cold winter of 2012-13. The company made up the 30 per cent shortfall by April 2013.

Management were aware that the company could fail to meet its target at the end of 2011 but Ofgem said budget increases for CESP schemes were made too slowly.

Ofgem’s senior partner, Sarah Harrison, said: “ScottishPower clearly missed its target by the required deadline, disadvantaging many households.

“Today’s redress package sends a clear message to the energy industry that late delivery of obligations is unacceptable.”

SSE’s failure to meet its target on time meant the equivalent of 2,100 households missed out on energy efficiency measures.

It made up the shortfall by May 2013 and ensured that around 346 more homes received energy efficiency measures than required.

The £1.75m penalty will benefit vulnerable consumers through the Foundations Independent Living Trust, Energy Action Scotland and the Citizen’s Advice Bureau for use in Wales.

Harrison added: “By agreeing to make the payment to charities, Ofgem and SSE are ensuring that this money is targeted to energy customers who need it most.”

SSE retail managing director Will Morris said: “Having worked very hard to deliver what was a very challenging and complex scheme, and having successfully delivered over 43,000 measures to over 21,000 homes by 31 December 2012, we are very sorry we did not meet our target in full by the deadline.

“We are pleased, however, that we not only made up the shortfall but hundreds more households benefited from energy saving measures. The settlement we have agreed with Ofgem today will go directly towards helping those most in need.”

Tom Greatrex, Scottish Labour’s shadow energy minister, added: “Energy efficiency is vital to helping consumers save money on their energy bills, and if energy companies have failed to meet their obligations, it is right that there is a heavy price to pay.”

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